Shifting to solar energy has multiple benefits, but perhaps one of the most appealing for some is the chance to make a return on their investment. Wondering how you can live a more environmentally conscious life and make money off the decision? Here is what you need to know…
1. Federal Government Solar Power Incentives
Since 2006 when the U.S. government passed the Federal Solar Tax Credit, homeowners have been incentivized to switch to solar energy. The Solar Tax Credit (which has been repeatedly renewed by Congress since it passed) offers homeowners a tax credit to offset the cost of solar panel installation. Also known as the Investment Tax Credit, the Federal Solar Tax Credit lets homeowners claim credit for as much as 30% of their solar panel installation cost on their federal income taxes.
The average homeowner pays between $16,000 and $21,000 to install a solar energy system. With this installation cost in mind, the average Federal Solar Tax Credit is between $4,800 and $6,300.
When passed, the Federal Solar Tax Credit offered a maximum incentive of 26%, but in 2022 the Inflation Reduction Act increased this to 30%. In 2033, this federal tax incentive will again drop to 26%, and in 2034, to 22%.
When the Inflation Reduction Act passed in 2022, Congress implemented an additional credit for standalone solar batteries and facilities that install solar plus solar storage solutions.
2. State Government Solar Power Incentives
The federal government is not the only entity offering incentives to people switching to solar energy. Many states are offering their own incentives too. The amount of each state solar incentive differs by state.
California is one state dedicated to the solar power shift, and as such, they offer residents anywhere from $0.95 per watt of solar panel installed or a flat $500.
Some states also offer homeowners the option to finance their solar panels and make payments on them through their property taxes. This financing makes solar energy much more affordable for homeowners in virtually any socio-economic class!
3. Net Metering
Another way that homeowners can make money from their decision to switch to solar energy is through net metering. Net metering describes a situation where a home with a solar panel system connects to the local power grid. When that home generates more solar energy than it uses, the homeowner gets credit for that “extra” energy. Public utility companies pay wholesale prices when buying back power from solar-powered homes. This net metering situation is less common for homes versus businesses, but it does happen.
In contrast to net metering, some homeowners sell back all the solar energy they generate to the electric company. This energy returns to the public-utility company, and the homeowner’s electricity bill is credited. If the homeowner uses more electricity than the solar power they generate, they pay the difference.
Conclusion
Converting to solar energy is environmentally beneficial and is a good step for your wallet! Not only can you take advantage of multiple rebates and credit programs, but you can also make money off unused solar energy.
